Banking News

The prospect of record low savings rates continuing is forcing many savers to review how they allocate their capital in an attempt to achieve the level of returns they have previously enjoyed. Investing in the stock market inevitably involves putting your capital at risk however there is a middle ground which continues to attract increasing interest – the structured deposit. With this in mind, we take a deeper look at this savings alternative to help understand why more and more savers are starting to see their appeal. more

With the current economic environment asking savers far more questions than it gives answers, it is good to know that there are alternatives available. We take a look at one such alternative that is proving particularly popular as savers face the harsh reality that the more traditional fixed rate savings products are failing to meet their needs. more

Millions of savers are facing the harsh realisty that there is little hope of change to interest and savings rates in the coming years. However, those with Cash ISAs do have one further option to consider – the ISA transfer. We take a closer look at why this is becoming a rising trend as well as what this could mean for those looking for the potential to improve the returns from their capital. more

With so many savers joining income investors in the hunt for high yields, being able to quickly understand and compare the numerous options available has become even more important. We therefore compare two of our most popular income investments to help understand what is driving their popularity and why they might meet your income needs. more

UK economy in for "long, deep recession", while Cameron accuses Labour of making a mess

10 December 2008 / by Rachel Mason

The current recession is likely to be "comparable in length and depth with the previous three major post-war UK downturns in the mid-70s, early-80s and early-90s" according to Bank of England policymaker, Andrew Sentence.

In a speech at a monetary policy and markets conference in London, Monetary Policy Committee member Mr Sentence said that even if there is recovery beginning in the second half of 2009, as suggested by the Bank’s November Inflation Report, the situation is most likely to mirror previous recessions where the economy fell by at least 2.5 per cent over a period of a year or more, which resulted in a "significant rise in unemployment."

He argues that although the MPC has already delivered a significant easing of monetary policy, it will take some time to have an affect, but that the Bank of England remains focused on countering the fallout from the global economic crisis.

"In the short-term, the monetary policy challenge is clear," he said. "To act to counter the negative impact on demand from global slowdown and banking crisis, and to head off the potential deflationary risks created by an emerging large margin of spare capacity."

According to a report published today by The National Institute of Economic and Social Research, the UK economy shrank by one per cent in the three months leading up to November, and is likely to contract even more in the quarter through December.

Last week, the MPC cut the interest rate from three per cent down to two per cent, having already cut it the previous month by a massive 1.5 per cent, from 4.5 per cent to three per cent; it is now at its lowest level since 1951.

Following these dramatic cuts, economists are predicting further reductions, down to one per cent or even zero. Although Sentence made no comment on whether or not the base rate would dip that low, he said that the recent cuts had moved the goalposts of the measures the MPC will take.

He said that in the long term, there need to be better policy instruments for maintaining the stability of the financial system, but doesn’t think it is reasonable to expect monetary policy to create these unaided.

"This would create confusion about the objectives of monetary policy and would be very difficult to operate in practice." he said. "We need to take time to decide what a new regime for regulating the financial sector looks like,"

Meanwhile, Tory leader David Cameron has criticised the way the financial crisis has been handled by the Government, saying he would not match Labour's new spending plans for 2010 and beyond.

While the Chancellor accused Mr Cameron of "unbelievable complacency", as he announced he would actually cut spending, Cameron hit back saying cuts are needed because of "the mess Labour have made."

But Liberal Democrat leader Nick Clegg says that both have got it wrong: "people desperate for help in these tough times will be amazed by David Cameron's determination to do nothing while Gordon Brown borrows billions of pounds to do the wrong things." he said

Mr Clegg said that instead of a VAT cut that will "be here today and gone tomorrow", additional borrowing should be used for things like insulating homes, building social housing and reopening rail lines, while "big, fair and permanent tax cuts for people and families who need it most" should be made "by closing tax loopholes that only benefit the very wealthy."